People are clearly having trouble occupying their time. With bank accounts bloated with unspent wages, many are taking to Reddit to do battle with hedge fund managers. I see one or two in WeWork as I stare in on my not so fun-runs. They are there in front of screens of numbers in green and red, counting their theoretical winnings and working out when to cash out positions that could make them very rich indeed.
We know this is going to end badly with the latecomers finding they cannot exit and that what goes up very fast , comes down very fast. But for now (Jan 30 2021) they can enjoy the fruits of wishful thinking.
I am another with time on my hands (though running a start up does do what it should to my bank account). For the most part, I can read for free and I don’t begrudge the FT the pound a day I pay (as you will understand if you read on).
I’ve enjoyed reading a very earnest article by Martin Bamford imploring advisers to keep clients away from Bitcoin speculation
The emperor’s new currency https://t.co/vRQCk09XBp My latest for @_moneymarketing pic.twitter.com/djQUxXPeJf
— Martin Bamford (@martinbamford) January 28, 2021
and a not so earnest weekend essay by Justin Cash on how online influencers sucker us into easy-money schemes where all you need to do is buy low and sell high. Justin reminds us (and Martin) that one million people follow an astrologer on TikTok for cryptocurrency tips.
But (apart from running in the rain) I’ve spent most of this morning thinking about Tim Harford’s fine article in the FT about “wishful thinking “. Harford’s article centers on a renowned Vermeer expert who was fooled into accrediting a fake Vermeer because it exactly fitted what the expert expected Vermeer to have painted.
The only things wrong with the painting are that a) it’s not very good and b) it was painted 400 years after Vermeer died. Otherwise it was exactly what the expert ordered.
The forgery was sold for the equivalent of £10m in today’s terms and triggered a steady stream of fake Vermeers over the next few years until the forger was discovered colluding with the Nazis. Rather than admit to lining his pockets with fascist money, he saved himself from execution by convincing the court that he had ripped the Nazis off by selling Goering a dodgy Vermeer.
This extraordinary story is now 70 years old. It has passed from a “life and death” court case into Dutch art-lore. But Harford doesn’t let us off with an excursion into nostalgia, concluding that
any of us is capable of falling for a lie. There is no guaranteed method of keeping ourselves safe — except to believe nothing at all, a corrosive cynicism which is even worse than gullibility. But I can offer a simple habit of mind that I have found helpful. When you are asked to believe something — a newspaper headline, a statistic, a claim on social media — stop for a moment and notice your own feelings. Are you feeling defensive, vindicated, angry, smug? Whatever the emotional reaction, take note of it. Having done so, you may be thinking more clearly already.
Why are we so gullible?
Many of us like to think that we are in possession of unique knowledge that will allow us to get the better of our immediate futures. It might be the validation of your theory of Vermeer’s lost years, or your disgust with the financial system or you may just want to magic your pension into a huge capital reservoir.
And this wishful thinking is very dangerous as it gives the fraudster a foot in the door , allows the day trader to expose his positions to speculators who have even bigger screens than you have. But I am going to take Tim Harford’s advice and start examining my emotions with a little more rigor.
The trouble is that right now my emotions can best be summed up as schadenfreude, the pleasure derived from other’s misery.
The trouble with schadenfreude , is that your donkey may get the same idea.
My issue is not so much Bitcoin, but that people don’t understand its significance – or, indeed, that of most investments.
Ruinous to the environment , sponsoring anti-social behaviour and ungoverned – apart from that – nothing much wrong with it.